CIT Says Fish Oil Ethyl Ester Concentrates Are 'Extracts of Fish' Under HTS Heading 1603

The goods at issue are "semi-synthetic fish oil ethyl ester concentrates rich in omega-3 fatty acids" that CBP initially classified under HTS heading 3824 as a fatty substance of animal origin. However, after BASF took the case to the trade court seeking classification under heading 1603, the government sought to classify the products under heading 2106 as food preparations.

Judge Joseph Laroski undertook a GRI 1 analysis of the different headings' applicability to the merchandise, first assessing whether the imports are an "extract" and then looking at whether they are an extract of "fish." The judge ultimately sided with BASF on both points, holding that the concentrates are extracts and, more specifically, are fish extracts.

Guiding the judge's analysis were two prior CIT customs decisions on similar merchandise: Marcor Dev. Corp. v. U.S. and Jedwards Int'l, Inc. v. U.S. In Marcor, the court said imported food grade shark cartilage protein isn't an extract of fish, while the Jedwards court said imported krill oil is an extract of fish.

The Marcor court defined "extract" as a "preparation containing the essence of the substance from which it is derived." Based on this definition, Laroski rhetorically asked what the essence of fish is. While the government looks to whether the goods take the "color, taste, and aroma of fish," the judge said the Marcor and Jedwards rulings made clear that these "are not the only characteristics that indicate whether an end product maintains the essence of its source." As a result, the court should engage in a "holistic effort to define the 'essence' of a source product," the decision said.

Laroski said the case law shows that the "relevant analysis concerns both whether color, taste, and odor remain in the imported product" and whether the imports are "sufficiently similar to the source in objective terms," including whether the imports predominantly consist of the "same substance and form."

The judge held that the products at issue maintain "the essence of fish," since they consist "almost entirely of substance" found in the fish source, including fatty acid and glycerides. In addition, the products remain in liquid form; continue to bear some resemblance to the fish in color, taste and odor; and offer the "same health benefit as the health source." That the goods contain less than 1% of additives doesn't strip the goods of their fishy essence, the court said, likening the products to the krill oil in Jedwards rather than the shark fin protein powder in Marcor.

Of particular concern to the judge was whether the "transesterification process that concentrates these fatty acids removes the imported product from the proposed HTSUS heading." The imports were made from ungutted whole fish by physically separating the oil in the fish from the "fish solids." BASF "chemically cleaves the fatty acids" from the fish source "from the triglyceride's glycerol backbone, esterifies the fatty acids with ethanol" to form ethyl esters, then concentrates the ethyl esters to create the end product.

Laroski said the "transesterification" of the fish source was a proper extraction, since the fatty acids in the imports are the same ones that were present in the "triglyceride molecules prior to the creation of the ethyl ester molecules through transesterification." The judge added that the fish source and the imports maintain the "same shape and form" in "several critical respects," since the fish oil and the final ethyl ester concentrates are both liquid, among other things.

The court then said the merchandise is a proper extract of "fish," which the government challenged on the grounds that the imports are extracts of "fish oil" as opposed to the fish itself. Laroski said neither case law nor "common sense" support the government's position.

The judge said the case cited by the U.S., U.S. v. Geo S. Bush, which concerned whether fish meal meant for use as fertilizer or animal feed was "fish" under the Tariff Act of 1922, is "too attenuated" from the facts at issue. The Geo S. Bush court said fish means the "flesh or organic structure of the animal fish," including "skin, bones, and fins." The judge said the government can't "offer any principled distinction between the 'skin, bone, and fins' of a fish, on the one hand, and oil that is physically removable directly from a fish, on the other," adding that heading 1603 imposes no requirement that the extracts of fish be taken directly from fish in the natural state.

Laroski side-stepped the question of whether the government can properly seek a tariff classification different from CBP's classification via counterclaim, finding that since the U.S. lost anyway, the question was irrelevant.

Rick Van Arnam, counsel for BASF, said in an email he's "pleased with the reasoning and thoroughness of Judge Laroski’s decision."

(BASF Corp. v. United States, Slip Op. 25-54, CIT # 13-00318, dated 05/02/25; Judge: Joseph Laroski; Attorneys: Frederic Van Arnam of Barnes Richardson for plaintiff BASF Corp.; Luke Mathers for defendant U.S. government)